Real Estate Crash

What should realtors do in the event of a housing market collapse?

Industry leaders discuss the most effective methods for surviving a financial meltdown.

With the possibility of another real estate market catastrophe looming, it is crucial for brokers to comprehend the best course of action.

Especially for brokers who may not have been in the industry during the past recession, it can be instructive to examine the effects of the previous property crash on the market.

"The number of mortgage brokers who survived the last market meltdown was just under half, with many less experienced brokers abandoning the profession for an entirely other one," stated Lyn Webb (pictured), the director of Mortgage Saving Experts.

Why things have changed

Webb stated that the entire sector altered after the last financial crisis. The subprime mortgage crisis was the primary reason for the market meltdown at the time.

"The quick rate at which mortgages were marketed and to whom they were sold contributed to the 2008 financial crisis," she explained. Low interest rates and lax lending guidelines fueled an unsustainable house price bubble.

As a result, the business became increasingly regulated, which, according to Webb, has led to an increase in people's faith and trust in their advisors. This, she believes, will enable brokers to continue providing support to clients, since they will continue to be receptive to the advice.

How to endure challenging market conditions

During the previous real estate recession, Webb and her husband were the only employees at Mortgage Saving Experts, which helped offset some of the financial challenges associated with operating a brokerage at that time.

However, Webb stated that the brokerage's ability to remain in business was dependent on its bank of loyal clients who still required advice and direction. As a result, she continued to operate and provide them with assistance, thereby assisting the brokerage in navigating the challenging economic climate.

"Many brokers also worked temporary or part-time jobs in order to pay their costs. "We are glad to have survived that period, and now that we are larger, we hope to be able to do it once more," she added.

Ways to survive

Webb emphasized that the first crucial step for brokers is to maintain advertising despite difficult economic situations, noting that there are less expensive marketing solutions available when times are rough.

In addition, she stated that brokers must have a presence on social media, making themselves available to offer advise to individuals through this tough time. According to Webb, this will help divert traffic to the broker's firm rather than to the competition.

"Contacting existing clients and offering your services is also required, especially given the current economic climate; if consumers are trying to cut their payments rather than terminate their policies, brokers should offer longer-term mortgages," Webb added.

Webb explained that most seasoned brokers have been through this before and know how to survive, but that rookie brokers will likely be astonished by the lack of money they receive compared to what they have been accustomed to.

Is a market crisis a hidden blessing?

"If mortgage interest rates rise, purchasers will no longer be able to afford to acquire a home at such a high price, which will result in sellers dropping their prices, which is beneficial for some," said Webb. Despite the prevalent perception that a property market meltdown is a bad time to sell but a good time to buy since house prices are lower, the opposite is true.

Webb said that market conditions during a recession typically result in a supply deficit relative to demand, which makes it difficult to climb the housing ladder.

She also highlighted that networking with accountants, attorneys, and others is one of the best methods for brokers to take advantage of these challenging market conditions.

According to Webb, brokers will likely have extra time on their hands as a result of less consumer demand; as a result, she believes this is the ideal time for them to grow their network.